The precious metal is rising along with risk assets, amid renewed hopes that the U.S. Congress will pass a spending package that, together with the Federal Reserve's massive stimulus program, could ease the impact from the coronavirus.
The US central bank said it would begin backstopping an unprecedented range of credit for households, small businesses and major employers in an effort to offset the "severe disruptions" caused by the coronarvirus outbreak. On MCX, gold futures rose almost 1.5 percent or Rs 579 in morning trade to Rs 40,937 per 10 grams after opening higher at Rs 40,721.
In the global market, spot gold fell 0.2 percent to $1,494.63 per ounce after rising as much as 3.1 percent in the previous session.
Gold prices inched up in volatile trade on Wednesday, as growing hopes for a massive USA economic stimulus package to stem the coronavirus outbreak's economic toll offset liquidation by investors looking for cash and to cover losses in other assets.More news: Over 170,000 volunteer to help United Kingdom fight coronavirus
Gold extended a surge toward $1,600 an ounce after the Federal Reserve took unprecedented measures to protect the US economy from the coronavirus shock, with Goldman Sachs Group Inc. saying bullion's probably at an inflection point and it is time to buy.
After already aggressively easing monetary policy this month, including sending interest rates to near zero, the USA central bank said it would now lend against student loans and credit card loans as well as buy bonds of larger employers.
"Near-zero interest rates, market uncertainty and ongoing liquidity injections, provides a bullish setup for gold and silver", she said.
"When you're seeing so much wiped off the stock market on a regular basis, the shortfall has to be made up somehow and gold remains the favored option", OANDA analyst Craig Erlam said in a note.More news: Chef Floyd Cardoz dead at 59 from coronavirus complications
Goldman reaffirmed its 12-month target for bullion to advance to $1,800 an ounce, saying that both near-term and long-term outlooks for bullion were looking far more constructive.
Indicating investors' appetite for gold, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 1.3% to 935.98 tonnes on Tuesday. This more than 10pc rise would take the value of the precious metal close to its peak of $1,900.
Platinum gained 3.8 per cent to $US634.32 per ounce, while palladium rose 1 per cent to $US1,658.50.More news: Tokyo postponement has 'no impact' on Paris 2024 Olympics, says organiser